FINRA found violations in 70% of the crypto assets they reviewed
The Financial Industry Regulatory Authority (FINRA) reported that approximately 70% of crypto-related communications from its survey made “false, exaggerated, promising, unauthorized or misleading” claims or otherwise violated guidelines on public communications.
In a report released on January 23, FINRA revealed that it has reviewed more than 500 crypto-asset-linked retail transactions since November 2022. According to the watchdog, it identified “potential violations” in more than 70% of reviewed communications. Rules regarding communication with the public.
FINRA Senior Director Ira Gluck said, “With the growth in this market and the increased interest in crypto assets, the potential damage from problematic communications has increased.” “Communications must clearly describe the benefits and features of a crypto asset investment or service in order to have sufficient information to evaluate it.”
According to a report published today on the results of targeted testing, we identified violations of FINRA Rule 2210 (Communications to the Public) in 70% of the crypto asset communications we reviewed. Learn more ▶️ pic.twitter.com/CFlFICQozS
— FINRA (@FINRA) January 23, 2024
According to Gluck, crypto-related communications can range from a podcast to an ad spot in the Super Bowl. The violations include making false claims about crypto and misrepresenting how the protections of federal securities laws apply to digital assets. FINRA added that the targeted test offered questions for crypto firms to consider in their public relations.
Related: FINRA Adds Crypto Assets Section to Annual Surveillance Report
FINRA launched its November 2022 review of crypto-related public communications following the FTX crash. Before the bankruptcy, the crypto exchange had one of the most famous marketing campaigns that employed celebrities, sponsored sports venues and former CEO Sam Bankman-Fried. In many media views.
As a nongovernmental regulator, FINRA is authorized by the United States Congress to regulate certain areas related to investor protection. The regulator works with the Securities and Exchange Commission to approve broker-dealer licenses for crypto companies and fines for violations of other guidelines.
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